Navigating The Complexity of Ownership From The Lens of Sanction By Extension
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The KYB serves as the primary data source for verifying businesses and conducting corporate due diligence in over 250 countries and states.
Navigating the Complexity of ownership from the lens of Sanction by Extension
Mitigating Business verification complexity with The KYB in MENA Region
Onboard businesses with our swift KYB verification.
Expand globally without facing non-compliance challenges
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Mitigating Business Verification Complexity with The KYB in MENA Region
API Integration
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KYB stands for Know Your Business, which is a due diligence process that companies use to verify the identity and legitimacy of their business partners or customers.
27 September, 2023
Developing countries suffer a financial burden of $1.26 trillion annually, which drains their resources and impedes progress. These figures highlight the significance of proactive measures, including enhanced scrutiny and stringent regulations. It is essential to conduct PEP screening of individuals whose position puts them at higher risk of being involved in illicit practices.
A Politically Exposed Person (PEP) is one who holds a central public position or is closely linked to such individuals. These positions usually involve a high level of authority, influence, or decision-making power within the state-owned enterprises or government.
PEPs can include:
Politically exposed persons’ screening is crucial to Know Your Customer (KYC) and Anti-Money Laundering (AML) processes. It checks individuals against PEP and sanction lists to detect potential risks. A thorough PEP and sanctions screening helps Financial Institutions (FIs) to proactively identify and mitigate the risk of fraud while ensuring adherence to regulatory requirements.
Let’s have an example to understand PEP screening better. Suppose a bank receives a loan application from someone who is a member of the country’s parliament. Thus, the bank would perform a PEP check before giving them the loan. This is to confirm that the individual has no links to organized criminals or is not involved in illicit financial practices.
Previously, only banks and financial firms were mandated to comply with AML regulations. However, a growing number of firms are required to fulfil AML requirements, such as:
It is important to note that the type of business subject to AML regulations varies from country to country. The best way to confirm if your business needs to abide by AML regulations is to contact your country’s regulatory body.
Performing an AML PEP screening is legally binding, and failing to conduct it may cost your business in a number of ways, such as:
The PEP audits are done by local authorities, usually in charge of AML screening. For example:
While regulators ensure your business performs corporate due diligence, no stringent regulations exist on conducting PEP screening. Below are three ways to suit your firm based on your scale and risk appetite.
The easiest way to perform a PEP screening is by manually looking at the right lists. Companies can do this by manually obtaining the details of PEPs available on official government sites, commercial databases, or public registers.
Another method is manually checking for names by entering them into an AML solution. This results in quicker searches by automatically aggregating results from several PEP lists. However, you still need to verify the data manually to ensure that you are checking the identity of the legitimate individual.
Companies subjected to AML regulations usually deploy fully automated PEP screening solutions. This involves integrating robust AML solutions either on-premise or through API. The AI-powered AML solutions work by aggregating information from multiple PEP lists and running it through different algorithms. Fully automated PEP screening helps companies verify that the clients are who they claim to be in real time. This helps mitigate the risk of financial fraud and avoid heavy fines while ensuring compliance with global AML regulations.
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